Lawsuit filed against Goolsby's firm

Published: Thursday, July 11, 2013 at 4:09 p.m.

Last Modified: Thursday, July 11, 2013 at 5:54 p.m.

Ten people have sued Sen. Thom Goolsby's Empowered Investor firm, alleging they lost substantial amounts of money when the firm placed their funds into unsuitable investments.

The suit, filed Wednesday in New Hanover County Superior Court by the Wilmington law firm Baker & Slaughter, also names Goolsby as president and James Upham, vice president.

Empowered Investor is a portfolio management firm that promotes itself through seminars and a radio program that Goolsby hosts.

The suit says that once the plaintiffs signed portfolio management agreements with Empowered Investor the company moved the clients' outside accounts to a brokerage firm, “such as TD Ameritrade or BrokerXpress, to be managed by the defendants.”

Most of those investments were retirement and savings accounts “which contained conservative, long-term investments,” the suit said.

After the accounts were transferred, Goolsby and Upham sold the clients' prior holdings and began purchasing speculative, high-risk, and volatile investments for their clients, according to the suit.

The plaintiffs lost tens of thousands of dollars, the suit indicates. They paid an annual management fee to Empowered Investor of 2 percent of assets, the suit said.

Goolsby did not return a call or text message seeking comment. A voice message left for Upham at his office was not returned.

Empowered Investor said “it took any emotion out of investing by always following the ‘10-20-50' rule whereby it always sold an investment if its value decreased by 10 percent, it looked for any and every reason to sell an investment if its value increased by 20 percent, and it never invested more than 50 percent of an account in the market at one time,” the suit said.

By followiing the 10-20-50 rule it was able to make money for its clients “whether the market (was) moving up, down, or sideways,” the suit said, quoting the company's website.

The suit alleges that Empowered Investor failed to follow its own 10-20-50 rule, saying “that numerous call and put options were not sold once they incurred a 10 percent loss but were instead allowed to expire, other stocks and securities were allowed to incur losses much greater than 10 percent before being sold, and investments that began demonstrating gains were sold quickly, well before any meaningful gains were realized.”

The suit enumerates losses to the accounts of all the plaintiffs, but as an example the suit says the Brittinghams had losses in four accounts that ranged from 20.4 percent to 82.3 percent.

The Curleys sustained losses to eight accounts of 20.9 percent to 95.7 percent, according to the suit.

<p>Ten people have sued Sen. Thom Goolsby's Empowered Investor firm, alleging they lost substantial amounts of money when the firm placed their funds into unsuitable investments.</p><p>The suit, filed Wednesday in New Hanover County Superior Court by the Wilmington law firm Baker & Slaughter, also names Goolsby as president and James Upham, vice president.</p><p>Empowered Investor is a portfolio management firm that promotes itself through seminars and a radio program that Goolsby hosts.</p><p>The suit says that once the plaintiffs signed portfolio management agreements with Empowered Investor the company moved the clients' outside accounts to a brokerage firm, “such as TD Ameritrade or BrokerXpress, to be managed by the defendants.”</p><p>Most of those investments were retirement and savings accounts “which contained conservative, long-term investments,” the suit said.</p><p>After the accounts were transferred, Goolsby and Upham sold the clients' prior holdings and began purchasing speculative, high-risk, and volatile investments for their clients, according to the suit.</p><p>The plaintiffs lost tens of thousands of dollars, the suit indicates. They paid an annual management fee to Empowered Investor of 2 percent of assets, the suit said. </p><p>Goolsby did not return a call or text message seeking comment. A voice message left for Upham at his office was not returned.</p><p>The suit charges negligence in unsuitable transactions and investment strategies, breach of fiduciary duty, negligent misrepresentation, and violations of the N.C. Investment Advisers Act.</p><p>The plaintiffs filed formal complaints in July 2012 with the Securities Division of the N.C. Secretary of State's Office, according to their attorneys. </p><p>Secretary of State's spokesman George Jeter said Thursday that the office doesn't “have any comment on whether or not there is any such investigation.”</p><p>The plaintiffs are seeking compensation for their actual losses plus interest, attorneys fees and costs. </p><p>The plaintiffs are Martin W. and Deborah A. Brittingham, James E. and Cynthia J. Curley, Douglas J. Curley, Alan B. and Debra C. Hughes, Wendy P. James, and Philip W. and Brenda F. Stophel.</p><p>Empowered Investor said “it took any emotion out of investing by always following the '10-20-50' rule whereby it always sold an investment if its value decreased by 10 percent, it looked for any and every reason to sell an investment if its value increased by 20 percent, and it never invested more than 50 percent of an account in the market at one time,” the suit said.</p><p>By followiing the 10-20-50 rule it was able to make money for its clients “whether the market (was) moving up, down, or sideways,” the suit said, quoting the company's website.</p><p>The suit alleges that Empowered Investor failed to follow its own 10-20-50 rule, saying “that numerous call and put options were not sold once they incurred a 10 percent loss but were instead allowed to expire, other stocks and securities were allowed to incur losses much greater than 10 percent before being sold, and investments that began demonstrating gains were sold quickly, well before any meaningful gains were realized.”</p><p>The suit enumerates losses to the accounts of all the plaintiffs, but as an example the suit says the Brittinghams had losses in four accounts that ranged from 20.4 percent to 82.3 percent. </p><p>The Curleys sustained losses to eight accounts of 20.9 percent to 95.7 percent, according to the suit.</p><p><i></p><p><a href="http://www.starnewsonline.com/section/topic99"><b>Wayne Faulkner</b></a>: 343-2329</p><p>On <a href="http://www.starnewsonline.com/section/news41"><b>Twitter</b></a>.com: @bizniznews</i></p>